Distrust As Wolfowitz Takes Command Of World Bank

by Emad Mekay

(IPS) WASHINGTON-- Paul Wolfowitz, the former U.S. deputy defense secretary, becomes the World Bank's 10th president Wednesday amid expectations he will lead the global lender down an increasingly politicized path designed to increase U.S. hegemony.

In the countdown to Wolfowitz's installment, dozens of advocacy groups and think tanks are voicing such concern and urging the newcomer to heed their advice lest his institution lose credibility.

According to a panel of finance and development experts organized by The Center for Global Development (CGD), a Washington economic think tank, Wolfowitz, the man best known for planning the invasion and occupation of Iraq and promoting them as U.S. policy, needs to restore the bank's legitimacy and increase its effectiveness.

The CGD panel also says Wolfowitz will need to resuscitate the bank's relevance for its big middle income and emerging market borrowers, especially in Asia and Latin America.

This comes after some finance ministers from Asian nations said during the April meetings of the bank and its sister institution, the International Monetary Fund (IMF), that they were steering away from the two lenders.

The ministers complained that both organizations, founded in 1944 by the victors of World War II, were too biased toward the interests of industrialized nations at the expense of developing countries and billions of poor people around the world.

The CGD experts, including veterans of multilateral banks, proposed that the World Bank initiate evaluations of all aid spending. This would help achieve the Bush administration's longtime demand that the bank move towards becoming a results-oriented operation.

Wolfowitz will need to use a combination of charm, cajoling, and horse-trading to corral the bank's members -- including its largest shareholder, the U.S. -- to address those tasks that are crucial to securing the bank's credibility, influence and effectiveness, said Nancy Birdsall, the CGD president.

"To succeed, he must make the most of his first few months in office, take advantage of his honeymoon," Birdsall said.

Another indication that forces are aligning behind the Bush administration's agenda in the bank, according to a watchdog group, is a recent report from the bank's quasi-independent evaluations office, which urged the bank to re-dedicate itself to generating economic growth rather than prioritising social services.

The Operations Evaluation Department (OED) said in its '2004 Annual Review of Development Effectiveness' report that growth, not spending on education and health, needs greater strategic emphasis.

The report also echoed the importance of a "results-based approach," proposed by the Bush administration in its first term, and requested that a renewed relevance be placed on infrastructure development and private-sector growth.

"My hunch is that this is an effort by the World Bank to put out something before Wolfowitz gets in office that accurately forecasts the direction the bank will be taking, but which gives Wolfowitz a little distance, so he can say, 'look, this started before I even came on board,'" said Soren Ambrose of the advocacy group 50 Years Is Enough Network.

"And indeed, the directions suggested by this report are those the U.S. government has been pushing hard in the last year or two," Ambrose added.

On the eve of his coming to office, dozens of watchdog groups that monitor World Bank policies say in a letter that they fear that Wolfowitz, a key Bush lieutenant perceived as having strong ideological motives, actually has been placed in this pivotal position as a political pressure tool to further disempower and discredit governments that may choose to place the priorities of their citizens over transnational corporate interests.

"There is a reason for Wolfowitz being put there," said Doug Hellinger of the Washington-based group Development GAP. "He's going to carry the administration's agenda in the name of democracy."

"He is going to open up further corporate access to markets, to resources like oil, to assets like banking systems, and to cheap labor," Hellinger added. "He is going to do that not only against great resistance in places like Latin America and Asia but also in Africa and the Middle East."

For his part, Wolfowitz has said that he views economic pressure as one way to end what the United States sees as tyranny in other countries.

That appears to be just what worries activists. Wolfowitz, they say, could use words like "democracy" to promote U.S. hegemony -- particularly in the Middle East, a strategically important area for Washington and its regional protege, Israel.

"We fear that 'democracy' will be among the new buzzwords at the bank, and the basis for a new set of conditionalities, particularly in the Middle East," says the activists' letter to Wolfowitz.

It adds that Wolfowitz needs to prove that the World Bank will stay clear of the Bush administration's agenda. The bank's executive directors, who approved Wolfowitz's appointment unanimously, had expressed similar reservations about Washington's handpicked, sole candidate for the bank chief's job.

"The World Bank's public relations staff now faces the challenge of convincing people that the new president is independent of the Bush administration and its controversial policies," says the letter.

Critics say they will launch a protest outside the bank in downtown Washington as the new president walks in for his first day on Wednesday. Some also will be there to distribute information to bank staff about their new boss and what they term his role in the stalled reconstruction of occupied Iraq.

Similar protests have been planned in other parts of the world, activists said.

But a World Bank spokesperson told IPS that engagement with civil society groups will be a priority for Wolfowitz, as will Africa's development -- both issues dear to activists.

Among the more immediate issues Wolfowtiz will deal with is a need to pursue European ideas to increase development aid to poor nations, to offer some of them debt forgiveness as well as to grapple with a global march towards more trade, said Damian Milverton, the bank's media manager.

Wolfowitz will spend the first few weeks of his presidency learning the ropes and holding meetings with some of the bank's 9,500-plus staff members, the bank said.